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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Republic Services Inc was -0.50. The lowest was -3.00. And the median was -2.72.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Republic Services Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.9982||+||0.528 * 1.0159||+||0.404 * 0.9879||+||0.892 * 1.0371||+||0.115 * 1.0045|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9096||+||4.679 * -0.0541||-||0.327 * 1.0395|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $989 Mil.|
Revenue was 2344 + 2311.4 + 2169.4 + 2214.1 = $9,039 Mil.
Gross Profit was 953.8 + 891 + 865.1 + 688.7 = $3,399 Mil.
Total Current Assets was $1,444 Mil.
Total Assets was $20,792 Mil.
Property, Plant and Equipment(Net PPE) was $7,553 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,033 Mil.
Selling, General & Admin. Expense(SGA) was $974 Mil.
Total Current Liabilities was $1,901 Mil.
Long-Term Debt was $7,556 Mil.
Net Income was 215 + 190.3 + 172.4 + 50.3 = $628 Mil.
Non Operating Income was -0.4 + 0.9 + 0 + 0.5 = $1 Mil.
Cash Flow from Operations was 423.3 + 405.1 + 496.1 + 428.2 = $1,753 Mil.
|Accounts Receivable was $955 Mil.
Revenue was 2267.9 + 2229.2 + 2077.2 + 2141.5 = $8,716 Mil.
Gross Profit was 866.8 + 852.3 + 752.5 + 857.5 = $3,329 Mil.
Total Current Assets was $1,361 Mil.
Total Assets was $19,987 Mil.
Property, Plant and Equipment(Net PPE) was $7,149 Mil.
Depreciation, Depletion and Amortization(DDA) was $983 Mil.
Selling, General & Admin. Expense(SGA) was $1,033 Mil.
Total Current Liabilities was $1,725 Mil.
Long-Term Debt was $7,020 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(988.8 / 9038.9)||/||(955.2 / 8715.8)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(891 / 8715.8)||/||(953.8 / 9038.9)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1444.3 + 7553.2) / 20791.8)||/||(1 - (1360.9 + 7149.3) / 19987)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(982.8 / (982.8 + 7149.3))||/||(1033 / (1033 + 7553.2))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(974.3 / 9038.9)||/||(1032.8 / 8715.8)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((7555.6 + 1900.5) / 20791.8)||/||((7020 + 1725) / 19987)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(628 - 1||-||1752.7)||/||20791.8|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Republic Services Inc has a M-score of -2.70 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Republic Services Inc Annual Data
Republic Services Inc Quarterly Data